Britain's biggest mortgage lender the Halifax took a fearsome battering yesterday during a second day of anarchy on money markets worldwide.

Shares in parent company HBOS plunged 22 per cent, wiping millions off the savings of small investors.

It followed a 17 per cent drop in shares during Monday's meltdown - meaning the value of HBOS has been slashed by £5billion in two days.

Halifax insisted there was no need for panic, saying: "This is a period of unprecedented turmoil but we are a very strong financial institution."

And analysts said Chancellor Alistair Darling would not allow Halifax to go to the wall like US giant Lehman Brothers. Meanwhile, there was more gloom as figures showed UK inflation has hit a 16-year high of 4.7 per cent.